Rates – Variable or Fixed?

Rates – Variable or Fixed?

Rates – Variable or Fixed? Making the Right Choice for Your Loan

When selecting a home loan or considering refinancing, one of the most important decisions you’ll face is whether to choose a variable or fixed interest rate. Each option has its own advantages and disadvantages, so it’s crucial to understand how they work to make an informed decision.

Variable Rate: The Flexible Option

Variable interest rates fluctuate over the course of your loan, meaning your repayments can go up or down depending on market conditions.


  • You can make unlimited additional repayments on your loan without penalty.
  • You have the flexibility to pay off the loan early or refinance with another lender.
  • Variable rates often come with features like redrawing facilities and offset accounts.
  • If interest rates decrease, your repayments will decrease too.


  • Interest rates can rise, leading to increased repayments.
  • Lenders can change variable rates at their discretion, making budgeting less predictable.

Fixed Rate: The Predictable Choice

With a fixed rate, your interest rate remains unchanged for a set period (usually between 1 and 5 years). This protects you from interest rate hikes during that time.


  • Repayments remain the same for the fixed period, making budgeting easier.
  • You’re protected against interest rate increases during the fixed term.


  • You miss out if interest rates fall during your fixed period.
  • Refinancing or paying off your loan early often results in ‘break costs’ as the lender loses out on expected interest.
  • Fixed loans often have fewer features, like the lack of redraw facilities or offset accounts.

Which One Is Right for You?

The best option depends on your financial situation and your outlook on future interest rates:

Consider a variable rate if: You want flexibility with extra repayments/refinancing, or believe interest rates may decrease in the future.
Consider a fixed rate if: You prioritize predictable repayments and believe interest rates are likely to rise.

Mix and Match?

It’s also possible to split your loan into portions with variable and fixed rates. This strategy provides a balance between flexibility and predictability.

You First Finance is Here to Help

Choosing the right mortgage rate is essential. Our brokers can help you understand your options and tailor a solution that meets your needs. Contact us to find out what works best for your lending needs.

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